Class action against student loan servicers settled

Posted on: September 18th, 2012 by Steve Larson

A class action suit brought by a member of Minnesota National Guard against student loan servicers has been settled for $2.32 million.  The Minneapolis law firm Crowder Teske represented the class. 

The lawsuit alleges that Citibank and the Student Loan Corporation failed to comply with a law intended to protect military service members on active duty.  The settlement affects more than 6,300 military service members across the country.

The complaint alleges that the lenders violated the Servicemembers Civil Relief Act.  Under the act, active duty troops are entitled to a 6 percent interest rate cap on their loans. The suit was brought by Major Lyndsey Olson, who deployed to Iraq with the Minnesota Army National Guard for a year beginning in 2008. She alleges the banks violated the interest rate cap during her military service.

Under the terms of the settlement, members of the military will receive cash payments of up to around $650 dollars per loan. Many of them have more than one loan.